Deborah Garofalo

Thursday, 18 July 2002 13:07

Root of the problem

Order fluctuations can send your business into overtime. Playing catch-up can lead to the loss of orders and customers.

Sales trends are often predictable, and careful analysis can help prepare a manufacturing plant for an upswing. But sometimes, a continuous, moderate order volume will cover up manufacturing problems, and until orders increase, the problems remain hidden. Then when sales peak, problems become evident not only to you, but to your customers, as well.

Uncovering problems within systems and processes is known as root cause analysis. It's a strategy Mark Welcer became familiar with at Avery Dennison's Specialty Tape Division in Painesville. Through this technique, he uncovered methods of improving and increasing manufacturing output for the manufacturer of pressure sensitive tapes.

When he joined Avery in 1997, the division was in a growth mode. Within a year, sales increases caused delivery delays. Orders were shipped on time and complete only 25 percent of the time.

"There were a lot of shortcomings in the system," recalls Welcer. "The customer service reps were making promises that we couldn't keep, not knowing that was the case."

The long stretch of increased demand -- which required production to run at maximum capacity --brought to light inefficiencies in processes from start to finish. As the backlog grew, it perpetuated delays in new orders. Soon, most of STD's customers were aware of the problem.

Establishing a service improvement team that met daily, Welcer gathered key players from every department to examine the root cause of late orders. Personnel from the beginning of the process, such as purchasing staff, to the end of the process, including machine operators, analyzed and examined the path of every late order asking one simple question: Why?

By digging deeper, what were once believed to be production delays due to demand fluctuations instead turned out to be systems and process problems. Included were errors in finished goods inventory levels, as well as vendor delays of raw material that caused scheduling changes which wasted valuable manufacturing time.

Within a year of probing into production processes, on time orders were consistently shipping in the mid-80 percent range and often peaked in the 90s.

Last year, Welcer left Avery Dennison to join the Pittsburgh division of Paragon Trade Brands, the third largest diaper manufacturer in the world. Within weeks of joining the company, he found himself in a familiar situation.

"It seems like this problem follows me everywhere," Welcer says with a laugh.

Customer demand increased to the point the plant was over capacity. It looked like the diaper manufacturer was going to lose at the game of on-time delivery for its top customers. As operations manager and new kid on the block, Welcer returned to methods he used at Avery to work through production issues.

Because the manufacturing lines were already running at maximum speed, Welcer turned his attention to manufacturing deficiencies that impacted productivity. Uncovering the need for equipment upgrades along with process improvements, Welcer and his service team increased capacity on some equipment by 25 percent.

"You don't necessarily have to go out and add people or add new equipment," he explains.

Waste factors on some equipment were cut in half, and a manufacturing line that was producing 16,000 diapers per hour jumped to 25,500.

"That's a lot of diapers," he says.

Bringing together departments that may not typically work together but definitely rely on each other throughout the manufacturing process opens communications and promotes problem solving, Welcer says. Capturing and recording data in that setting puts the issues out front for everyone to see.

In the Paragon service meeting, daily results were put on a board, along with the three biggest issues that prevented manufacturing from meeting its goal.

"What that basically says is, 'Here's the expectation ... Did we get it done or not?'" Welcer says. "It's going to stay there until we get it resolved. You need to make your expectations known and clear.

"People don't mind being accountable when they know you're going to support them in getting what they need and in getting results."

Deborah Garofalo (dgarofalo@sbnnet.com) is associate editor at SBN Magazine.

Thursday, 18 July 2002 13:01

The gospel of e-business

A small office on Public Square is home to seven people dedicated to the advancement of technology. Together, they make up the operations center of the Northeast Ohio Software Association, a nonprofit trade association founded in 1998 as the brainchild of executive director James Cookinham.

With a board of directors culled from industrial and educational institutions, Cookinham and crew act as catalysts to integrate advancements in software into traditional business applications. Their mission is to grow Northeast Ohio business through the marriage of industry and technology.

Kansas-born Cookinham was raised in Spain and traveled extensively around the world as a nuclear engineer with the Navy. With wild white and silvery hair, it's hard to imagine that he once built nuclear power plants in Europe for Westinghouse. Rather, he looks like he spent the bulk of the '70s and '80s touring with the Grateful Dead.

In 1981, he combined his technical mind, an MBA and a love of software to found International PC Owners, the first publication printed on the IBM personal computer. Since then, it's been his overriding passion.

From Cleveland to Youngstown to Akron, incorporating technology into business is no easy task. SBN Magazine sat down with Cookinham to explore the role NEOSA plays in facilitating the growth of technology in the highly industrialized Northeast Ohio region.

How does this region fit into the national information technology industry?

There are more than 2,000 information technology companies in Northeast Ohio. We have 460 companies that are members of NEOSA.

I saw a study the other day that talked about the salaries of the people working in the IT industry in Ohio, and it's around $8 billion a year. In the eight-county region around Cleveland, there are 75,000 people employed in information technology, of which about two-thirds are in traditional industries. As I talk to people, communicate around the region, most people are surprised.

Nationally, we're not known as an important part of information technology, and I think even amongst ourselves, we're not known for that. We need to train ourselves, to educate ourselves as to how much is going on in Northeast Ohio, then try and get the word out to the rest of the country that there is a lot going on here and there are reasons to move companies here.

That's a challenge for us. My sense is we are at least average; we're not at the bottom of the barrel.

What would be our strongest asset?

The fact that we have the traditional industries here might put us in a stronger position than other regions. The challenge is to take these new technologies and integrate them into our traditional industries.

What can be done to keep the economy strong here while the national economy zigzags up and down?

When you talk about economic growth, there are two models. One is attracting companies and the other is growing our own companies. I would be an advocate of growing our own first, like we're doing.

If we had a solution to having smart IT people ready to go to work, companies would beat our doors down trying to get here. There's a shortage of IT folks throughout the country that includes a shortage of professors. The IT industry is paying a lot of money for these experts, and it's a challenge for the universities to get enough money to pay these people.

Is the latest and greatest technology really coming from educational institutions or is private industry driving innovation?

We recently had a tech transfer conference in order to showcase some of the technologies that exist at NASA, the University of Akron, Kent State University and Case Western Reserve University. We had about 250 people there.

I think the universities feel that more needs to be done on their end to get more funding to do more research. Information technology is the fastest growing sector in our economy. Most of it is not done out of tech transfer, it's done out of private companies with an idea -- entrepreneurs working Saturdays, Sundays and at night.

Do we have an advantage having NASA in our backyard?

Yes. One of the things we addressed at our conference was that issue. When we think of tech transfer out of NASA, we think of Tang or Velcro, but a lot of tech transfer is more one to one -- in other words, getting to know an engineer at NASA, and when you're trying to design a particular thing, you think, "Well if I talk to Dr. such-and-such, he could help me."

One of the things we need to continue to work on is to introduce the engineers, the brilliant people at NASA, to our day-to-day businesses.

How can the business community help?

By helping the educational institutions gear up. We need to reach out to the universities to help them adjust their curriculum, tell them what the industry recommends they do and see that we have education institutions that are providing well-trained people to support their industry.

We have some events with Case Western, John Carroll and Kent State where we introduce the students to the IT companies. We hear about this brain drain, students graduating and leaving the region. In some cases, the students don't know the companies in this region.

What is the brain drain everyone keeps talking about?

There was a study done in the past few months by a group at Case Western. The study found we are losing students to outside the region but we are also attracting students to the region. So if you add them up, it's about neutral.

The study didn't show we had a large brain drain. We are trying to work with the universities to get students to come to our networking events, again to start breaking down these barriers and get more internships started. We need to do some things to make sure the students understand there's stuff going on here.

We're looking at listing colleges on our Web site, so if a company were looking for an intern, information would be available.

What projects are in the works at NEOSA?

We have networking events in which people just get to know people, once a month, the fourth Thursday, at the Great Lakes Brewery. We have similar events in Akron and Lorain, and will be having one in Youngstown.

We also have the NEOSA Angel Network, which is a network of high net worth individuals. We have a system to have business plans come through. We review them and present them in front of individuals to either invest or not.

On the education front, we help companies get to know the schools better and the students to get to know the companies. We have about 110 events scheduled this year, so we have a lot going on.

Explain how the Angel Network functions.

We throw around these terms angel investing and venture capital, and a lot of us don't really understand what it means. Venture capital and angel capital is for a company that's going to have explosive growth.

In other words, you're going to go national. You're going to have $100 million worth of sales and you're going to work Saturdays and Sundays and forget the soccer games. This is an intense kind of business.

About 80 percent of the companies are not going to make it, so investors need to hit some major home runs in the few that do. They've got two employees today and they're going to have 500 employees in three years. If it's not that kind of growth, then you're not really the type of company that would be of interest to a venture capital company or an angel investor.

Is that how Cardinal Commerce got $2 million?

Cardinal did go through the NEOSA Angel Network. It provides security for transactions over the Internet. Is that a big market? Well, it's an enormous market.

There is fraud on the Internet and there is fraud with credit cards, and it has the technology that will address many of those issues. It has a management team of experienced people. That's critical.

And, they've got strong members on their board of directors. So they're a powerful company, one of those that have the potential to be a big national company.

How can NEOSA rally interest when the NASDAQ keeps dropping and dot-coms are falling by the wayside?

I think the economy had a dampening effect on a lot of people. The excitement around start-up companies has clearly lessened. However, I also think the fact is that we didn't have a lot of the dot-coms. The companies we are seeing are really good businesses, companies that are wondering how they will do this on the Internet.

It's made the businesses have to be much more serious; they've got to talk about how are they going to make money. There's still a lot of interest. The Internet is an inflection point in the world, in the way we do things. Figuring out how to adjust to that New World is a place for a lot of opportunity, to make money and get new businesses to do things in new ways.

It's really a unique time in the world. It's not going to go back in the box; the Internet is here to stay.

Is it all about making money, or is there something more?

I think it's more about changing the world. My sense is that a lot of people that love doing this are not so much driven by money as they are excited about what they're doing.

For example, we're going to start broadcasting a NEOSA show over the Internet. We can have our own NEOSA TV show with very little effort. If you think about that, it changes the whole paradigm. For very little money, you can do your own show.

What does that mean to the way we've always done things? Because of this change, there are incredible opportunities to do things in different ways. It's all up to our creativity and imagination to figure out how to use these technologies.

What do you see in the future?

If you think about having computers, if we all had really broad bands, there could be a list of every movie that had ever been done. If you wanted to, you could just go and click on it and watch it. The possibilities are mind-boggling.

Think about the Soviet Union 10 years ago when it was trying to control the press; there's no way it could do that now. What countries used to be has changed; the borders are not that important. I ordered a book from Amazon in the U.K. The shipping price was the same; the delivery was the same; it made no difference if I was buying it from Seattle or London.

The border is not meaningful any more. It's a world economy.

Can we learn from other countries?

Ireland is a great story. Not that many years ago, we thought of Ireland as the bottom of the economic barrel in Europe, really the poorest of the poor. They've taken this IT thing, whether it's Cisco or Microsoft, and put big centers in that country. My understanding is that a lot of Europe is supported out of Ireland.

Take India; it has a great educational system. You'll notice in the paper we're going to India to get high school teachers. This is a knowledge economy. Intellectual capacity is what really counts.

You'd better think about continuously keeping yourself up-to-date for the rest of your life. College is never going to be over because it's changing so fast. That's happening and there's no way to stop it, not that you'd want to.

What is our challenge moving forward?

In this region, the driving economic force is probably the manufacturing industry, the traditional industry. The challenge is to get these new technologies integrated into the traditional industries. If I put on an event, the traditional industries would say, "That's self-serving because your companies are selling those services."

But if they don't adopt some of these technologies, and I'm talking about small manufacturing companies that may supply parts to the auto industry, then they're in peril. We need to get the leaders of the community involved. How to reach: James Cookinham, (216) 592-2257 or James@Cookinham.net

Deborah Garofalo (dgarofalo@sbnnet.com) is associate editor of SBN Magazine.

Thursday, 18 July 2002 12:48

Priceless commodities

The cost of finding new customers far exceeds the cost of keeping established ones.

The same holds true for employees. While retention practices are often equated with bloated salaries and costly perks, the truth is, many business owners keep their best performers without excessive spending. The value of these best practices in retention is, quite simply, priceless.

Parker Hannifin Corp. incorporates traditional business practice standards to increase job satisfaction throughout its organization. Viewing employees as valuable equipment that keeps product moving, Parker's top management has established methods to maintain its work force.

A younger company, Market.al, works within a tighter budget but does not sacrifice high standards to keep its staff. With a belief that small businesses need more than a public relations agency, Market.al was formed to develop marketing plans and programs along with ad campaigns for growing businesses.

No matter the size of your company, the importance of retaining and retraining a work force cannot be stressed enough. While deep pockets and far-reaching resources allow for more extensive programs, the basic principles and processes remain identical, whether you are a global industry leader or a small niche-oriented firm.

Apply proven processes to people

Many members of Parker Hannifin Corp.'s management staff have 20 to 30 years of service at the company. But long-term employment is not unusual at any level of the organization, says Daniel Serbin, vice president of human resources.

The manufacturer of motion control products, fluid power systems and electromechanical controls has 45,000 employees in 45 countries. According to Serbin, one of the company's competitive strengths is its employees and its ability to keep them using methodology similar to Parker's manufacturing processes.

"Our whole culture is continuous improvement," Serbin says. "What worked five years ago may not work today."

Not including workers at Parker's recent acquisitions, the average length of service at the company is 13 years worldwide for hourly employees. Serbin attributes part of the company's retention success to its structure -- individual locations typically employ only 200 to 300 people.

And, although there are higher costs associated with smaller divisions, Serbin says it is good for employees, as well as for the customer base. Affording greater focus on the market allows the company to respond quickly to what customers want and not lose sight of employees who excel.

"Our culture, being so decentralized, affords people the opportunity early in their career to come in and make a mark," Serbin says. "It's not like they're coming into a facility where there are 2,000 people and may get lost."

Good recruiting equals good retention

The search, interview and hiring process is equally as important as what happens once a new employee walks through the door, Serbin says.

"Our goal is to hire the right people and make sure they have a career (at Parker)."

For example, new sales engineers are put through a 12-month training program before being assigned their own territory.

"If we would lose people that we put through a training program for a year, it would be very expensive for us," Serbin says. "Recruiting well means a higher likelihood of retention. We're trying to find employees that match our culture."

Develop a culture of ownership

Part of Parker's cultural style has consistently included the team concept that became popular in the 1990s. Since he joined Parker 21 years ago, Serbin says the team philosophy has been in place with an "ask culture instead of a tell culture."

Slightly fewer than 50 percent of the organization's plants are managed with self-directed work teams. Taking on responsibilities typically given to a supervisor, employees do everything from purchasing equipment to creating a more productive environment.

One key to the team concept is good communication.

"Having honest dialogue, you're much more likely to succeed in keeping people," Serbin says. "If you hear what they want to do, then you can put a development plan together. Development is for everybody."

To contribute to the feeling of company ownership, all employees are offered the opportunity to take a financial class called Biz Whiz, which explains how to read financial statements and how all the manufacturing processes link together to affect profits.

Explains Serbin, "We want people to understand the finances of the business so they can contribute to help running the business."

The priceless perks of Market.alEight years ago, Ellen Moriarty and John Sancin were recruiting clients from Sancin's basement.

Today, along with a third partner, Eugene Bernhard, Market.al's client base includes Harley Davidson's Dealership System Management Division, Cole National Corp., Norandex Inc. and Fuelman of New Orleans. A staff of 14 serves customers from Ohio to Arizona.

Moriarty, vice president and chief operating officer, attributes the company's success to a creative, dedicated, hardworking staff and a relatively low rate of employee turnover. With smaller reserves to work with, creativity has become a key element in the firm's ability to keep its employees.

Offer the comforts of home

After outgrowing its office in Independence, the company moved to Broadview Heights and discovered the hard truth that atmosphere plays an important part in attracting employees, creating job satisfaction and retaining employees.

Market.al occupies a 7,000-square-foot building that more resembles a ski chalet than an office. Two wood-burning fireplaces and 2,200 square feet of decking enhance the homey atmosphere. The building overlooks a natural wood setting.

With a fully stocked kitchen and outside grill, breakfasts, lunches and even late-night dinners are never an issue. Because deadlines and not the clock drive the work hours, Moriarty says the kitchen is a necessity. And, while vending machines may be enough for other businesses, the comfort of a kitchen table not only provides a place for tossing around ideas, it also acts as a meeting room for training.

Weekly "No Free Lunch" training sessions allow the staff to come together with speakers or watch videos on best practices in the industry. The only cost is the person's participation.

Create lasting value

While credentials and experience are important, Moriarty explains, "We were looking for people that had a great attitude, an eagerness to learn."

Having experienced the corporate America atmosphere, Sue Grzybowski says working at Market.al is gratifying because everyone is on the "same playing field."

"What we think and what we do are valued," says Grzybowski, the firm's communications manager.

Chris Cooper is working at Market.al in his first full-time job in graphic design since he graduated from college 18 months ago. After interviewing with 12 companies, the deciding factor came down to the value he places on learning.

"The one thing that really stood out was that they were willing to teach and grow with me," Cooper says.

As the new kid, he says the atmosphere of equality allows him to share ideas with co-workers as well as with the partners. The value of that to the company is tangible.

For Cooper, that fostering of creative ideas is an intangible perk that keeps him from looking for his next promotion elsewhere. For smaller firms such as Market.al, knowing what motivates employees is the start of a successful retention program.

The reason Mathew Maserati stays with Market.al is the same reason that has him in the office early and staying late.

"I have a passion for what I do, and it's rewarded here," he says.

The self-taught systems specialist bypassed another well-known company four years ago because Market.al recognized his need to be creative and actively contribute.

"It's not that they're hearing you ... they're listening," Maserati explains.

And for many younger workers, that is a distinct difference.

Fostering employees' sense of ownership also develops their sense of self-worth. Businesses that recognize the relationship between productive employees and productivity have nowhere to go but up as the labor market continues to tighten and the search for qualified workers becomes more difficult.

Cross-train your team

When Grzybowski asked to help in the client side of the business, the opportunity was there.

"We're not classified into one set of tasks," she says.

Her previous involvement with customers had always been after a project had begun. She says the experience of initiating the sale adds a valuable asset to her portfolio of knowledge.

Admitting that money is a motivator, Grzybowski says that having the chance to grow and knowing that your feedback is valued weighs just as heavily. With no plans to leave the company, she says, "As long as the challenge is still there, the spark is still there."

Cross training not only offers growth opportunities for employees, it strengthens a business against staff drain during peak periods, helps in vacation coverage and increases a sense of team building. Key to its success is finding out who wants the challenge and using it as a motivational technique.

For Market.al, as with businesses of any size, finding ways to keep employees from leaving for the competition is a struggle every day. The bottom line is that, these days, the more your company provides employees with, the better off it will be.

And simply throwing money at them is not the answer. How to reach: Market.al, (440) 717-7600; Parker-Hannifin, (216) 896-3000

Deborah Garofalo (dgarofalo@sbnnet.com) is associate editor of SBN Magazine.

Friday, 28 June 2002 06:04

Setting the standards

Brothers Adelbert (Chip) and Scott Marous were practically kids when they founded Marous Brothers Construction in 1980. Chip was just 19 years old and Scott barely 23. They were apprentices, still perfecting their trade, when they realized that to succeed against larger competitors, they needed to raise the bar in quality and service. More important, they understood they had to keep their promises.

The company started small, and focused in carpentry and remodeling. Today, Marous Brothers is a multimillion-dollar general contracting firm.

In the 1980s, subcontracting dominated the building industry. General contractors spent their time rounding up skilled craftsman, from excavators to metal workers, to complete projects. Chip Marous says starting out as one of those subcontractors opened his eyes to how problems with even the smallest aspect of a project affected the end customer.

"When these guys (general contractors) started getting out of the self-perform business and became brokers, they really lost control of the projects," says Chip Marous. "More and more jobs started running over schedule because they couldn't control the subcontractors ... none of them were their own forces."

Rather than put their fledgling firm's reputation in the hands of small, sometimes unreliable, contractors, the brothers hired permanent employees with expertise in most of the various disciplines. In 1997, a third brother, Ken, joined the firm. Previously, he had co-owned an excavating firm in Arizona, and brought with him experience in concrete and grading.

Today, the three handle different areas of the business. Scott is responsible for the overall field operation as COO. As vice president, Ken runs the field operations of all projects performed by the Site and Concrete Divisions. Chip oversees daily office operations and new business development as president.

The brothers recently upgraded their overall technology and implemented a total quality management program. Chip says the moves underscore the company's dedication to creating hard-to-match standards that customers demand. How to reach: Marous Brothers Construction, (440) 951-3904

Monday, 03 June 2002 06:35

Creative destruction

There are two things you can say about manufacturing: Since the industrial revolution, it has been the lifeblood of business in the United States. And it has also been one of the hardest hit industries in this latest recession.

We will always need to make things. But what things and how we make them are the issues manufacturers -- especially large, traditional manufacturers -- are grappling with. Businesses are always changing, but it seems manufacturers face a crucial crossroad that separates the ones willing to accept change from those that are not. And the stakes of this choice are high -- their very existence.

The Lincoln Electric Co. is one business that has seen the writing on the wall. Since 1947, Lincoln has been a case study at Harvard Business School, where students analyze its lucrative employee incentive plan and guaranteed lifetime employment.

At a time when mass layoffs and plant closures are the norm, Lincoln continues to pay out significant profit sharing bonuses and maintain its staffing levels.

"We've not had a layoff here in over 60 years now," says Roy Morrow, director of corporate relations. "We've given out an annual bonus ever since 1934."

But the times are changing, even for Lincoln. In 1992, the company experienced its first operating loss, and throughout the past decade it has expanded its global presence and been forced to re-evaluate its traditional vertical integration and large inventory policies. Brought on by Y2K compliance concerns, Lincoln seized the opportunity to take advantage of the benefits of technology and revamped what had been successful manufacturing practices for more than a century.

Economist Joseph Schumpeter refers to the process of change as creative destruction: "Growth is a process of creative destruction in which major technological advances create new venues for enterprise and make other venues obsolete."

Such is the case with Lincoln Electric.

Lincoln's corporate headquarters on the east side of Cleveland includes 1.5 million square feet of loud metal presses that punch, bend, weld and varnish raw steel every day. The facility is so large that the main aisle that cuts through its middle is referred to as Lincoln Boulevard.

Away from the din of the manufacturing floor, Jim Appledorn walks anxiously into President of Lincoln Electric, North America, John Stropki's plush office to hand him the company's first online distributor order. The two study the paper as though it were a rare and valuable document, and in some ways, it is.

The order is the tangible result of the 107-year-old welding manufacturer's transition from Old World to New Age.

Appledorn, who arrived at Lincoln as its information technology e-business manager, and Stropki shake hands and pat each other on the back. But as quickly as it began, the ceremony is over, and it's back to business. Milestone or not, the company still has a long way to go, and e-commerce marks part of the beginning, not the end, of Lincoln's complete business overhaul.

During the onslaught of bankruptcies, downsizing and plant closings in the manufacturing industry, Stropki and his team quietly invested millions of dollars in new equipment, process improvements and information technology. As other manufacturers held on to what made them successful, Lincoln executives understood that change -- with a price tag of more than $75 million for new machinery, information technology, improved process capabilities and R&D upgrades over the past five years -- was inevitable.

"Over the last four to five years, we spent approximately $16 million and built the most modern consumable laboratory, wet chemical lab where we do research and development," says Bud Fletcher, a Lincoln spokesman.

It was a smart move by a major player in an industry known for moving slowly on technology investment. But Lincoln has always been known for its innovation.

For the last 90 years, the company has manufactured arc welding equipment. Arc welding is one of those things that affects our daily lives, yet the main industry players remain unknown to the general public.

Lincoln is the biggest of those players. Last year, its total sales reached approximately $1 billion. This year, it will exceed those numbers. And although it has a presence in 19 countries, the majority of its new product line is produced at its Cleveland headquarters.

Its long and innovative history reaches back to 1895, when John Lincoln founded the company to build an electric motor of his own design. His brother, James, joined the business in 1911, and their partnership eventually gave the world its first portable welding machine.

One thing that kept the company successful was the brothers' penchant for unique business ideas. Lincoln was a testing ground for the first group life insurance policy, offered to employees in 1915. That was followed in 1934 by its legendary incentive performance system.

Of its early business practices, a guaranteed employment policy is still in place today, with shorter working hours and job rotation substituted for layoffs during slow economic times. Its long-standing policy has been to work employees long and hard, and pay them well for every part they make. It's called the piecework-pay method, and it's designed to encourage mass production.

Stropki, who is also president of the company's North American operations, believes the company's founders initially relied heavily on their workers to outperform the competition. But things have changed. Efficiency and quality are now often more important than quantity. In the not-so-recent past, the focus was on big batch runs and heavy inventories. Mass production was the edict.

But eventually, as a result of inflated inventories, employees filled the plant with the wrong parts. They were at the mercy of an 11-year-old mainframe system that dictated inventory levels. Lincoln's entire production system was laden with inefficiencies.

"The common thinking was, if customers weren't satisfied, we needed to build more inventory," says Lee Seufer, director of manufacturing and engineering of the Machine Division.

The "build it and they will come" mentality remained entrenched at Lincoln until 1999. Then, as the order backlog rose, so did inventory levels. Customer dissatisfaction was rising, and change was imminent.

Lincoln's order fill rate averaged 80 percent, meaning an order was shipped the same day it was received only 80 percent of the time. Employees hustled to improve the unacceptable statistic.

"They built almost 50 percent more inventory, but the fill rate went down to 75 percent," Seufer says.

To understand why Lincoln had to change, it's necessary to understand what has changed in the manufacturing industry as a whole. According to a white paper by the U.S. Department of Commerce on the manufacturing industry, "In recent decades, the intensification of global competition and epochal advances in information technology have begun to favor business organizations that are smaller, flatter and more flexible than their predecessors."

Basically, fewer workers produce more products at a quicker rate than they have in the past. The Department of Commerce reports, "U.S. manufacturing industries' employment share fell from roughly 25 percent to 15 percent ... (but) the decline in manufacturing employment during the 1980s is not a consequence of deindustrialization. There is no parallel decline in the manufacturing share of total output."

In Lincoln's case, the inefficiencies of its plant operations were clear. A process flow analysis revealed that at times, it took a part eight-and-a-half weeks to travel more than one mile through the factory, going through 120 steps which often included storage time as a result of machinery breakdowns.

Idle machines were not unusual. A great deal of Lincoln's equipment dates to the 1940s and '50s. If a machine broke down, employees made the parts and did the repairs, tying up human capital, slowing the production line and incurring expensive downtime.

Another drawback to the old machinery was extensive set-up and switchover time. In some cases, it took up to six hours to change a press.

"If you spend half the day setting up the press ... then you should run two days worth of parts ... and that's not good," says Seufer.

And it was time-consuming to train new operators. That resulted in a workplace where everyone's job was very specific. If someone was absent, the resource pool to replace him or her on that machine was limited.

"Almost 20 percent of the time, our assembly lines were shut down because they didn't have the parts they needed when they needed them," Seufer says.

For Lincoln's continued survival, something had to change -- and quickly.

"Traditionally, we've been a stock heavy company, with a heavy commitment to inventory," Stropki says. "(But) if your goal is to get an order in an expedient, cost-effective way, you have to fulfill that order in an expedient, cost-effective way."

While process and system improvements were always the goals of Lincoln management, they were long-term goals. But potential Y2K problems lit the proverbial fire under Lincoln management. Suddenly, long-term system improvements moved to the top of the to-do list and brought along with them plantwide improvements.

"That was the push," says Morrow, "for Lincoln to say not only must we be Y2K compliant, but while we're doing that, let's get our house in order ... and let's make sure our systems are the best that we can have."

Historically, many of Lincoln's top management positions are filled from within. The IT department was the exception. Appledorn, recruited from Lincoln's regional sales office in Houston, fit the typical employee profile. He arrived straight from college and planned to stay for retirement.

But he was partnered with George Slogik, an e-business systems development manager plucked from Ford Motor Co. Slogik was brought in because of his valuable experience in production systems, and after the two leaders were in place, the IT department grew from 15 to 94 system analysts with varied technical and business backgrounds.

"Our staff is relatively young compared to the rest of Lincoln Electric," Slogik says. "On a day-to-day basis, we make decisions. It expedites things tremendously, having people that have been out in the sales force or other parts of our business and part of our e-biz team."

In late 1999, Lincoln's sales were increasing. But so were backlogs of inventory levels. Slogik decided his first step would be to implement SAP, an operations platform that integrates plant processes with technology.

The move worked. Fill rates that had been as low as 65 percent in the 1970s and 80 percent in the 1990s rose to 95 percent. Today, the fill rate exceeds even that.

It was then that Appledorn considered taking a swing at integrating e-commerce. First, he conducted face-to-face interviews with customers to find out what they wanted.

"(It) was an interesting process internally to do because there was a lot of excitement and you had to kind of bring it down to what's reality," Slogik says. "What can we do? What do our customers want?"

Although the presumption was that customers wanted to do all their business online, Appledorn and his team found they were more interested in having access to information such as the status of accounts, orders and shipping.

"What they really needed was information," says Appledorn. "There's a lot of cool things you can do out there with an extranet and online ordering ... but unless the customer's fundamentally interested in that, you're not going to be successful."

Stropki agrees.

"We knew we couldn't have a great e-business platform and not have the functionality on the back end," he says. "So we had to go through the entire organization and take a look."

So simultaneously, Lincoln's e-commerce initiative and company makeover were underway. Slogik, Appledorn and their team tackled technology, while the manufacturing engineering team worked in the plant to streamline operations and move the company and its work force from piecework to gang pay. Gang pay is a slang term used by employees that means no one gets paid until the completed part rolls off the line.

For Lincoln's management, these changes were designed to promote teamwork and shared responsibility.

"The important thing isn't how many holes did I punch today ... it's how many completed products got off the end of the line," Seufer says.

Although it may not sound like a big change, it's important to remember that Lincoln is a company where a high-end factory worker could earn $100,000 a year, and the average year-end bonus in 2000 was $17,579. But everyone realized that if production levels and efficiency weren't there, Lincoln wasn't going to make it.

"If you go back to the original Harvard business case study ... the chairman of the board at the time ... made a comment that Lincoln is not a sales company, it's not a marketing company, it's not an R & D company, it's a manufacturing company, and our success was going to be embedded in how well we made product," Stropki says.

In the past, manufacturing delays at Lincoln were commonplace, the result of frequent machinery breakdowns. Upgrading the equipment was an expensive option, and a move away from the long-held tradition of buying cheap and fixing often.

However, a significant upgrade served two purposes -- it decreased downtime and allowed for fast, flexible operator training.

The factory floor was cut in two, and a separate area was dedicated to new equipment. In stark contrast to the older section, the new area has bright white lighting that reflects off the sealed concrete floor and includes fresh flow air filtration systems.

"They're ergonomically hands down above anything else we've ever done," says Seufer.

Two identical 75-ton presses, considered small in comparison to the older machines, stand side by side. The dies are interchangeable, as are the operators. In fact, one person can run both presses simultaneously.

In addition, 300-ton presses were installed in August 2001 and are equipped with quicker die changeovers for smaller runs and lower inventory levels. Now operators can move from press to press as needed. Seufer expects all the old presses to be replaced by summer 2003.

Seufer also re-engineered the plant floor to keep up with demand yet remain flexible. The first causality of his redesign was the high level of inventory.

"We went from a push to a pull (inventory)," he says, referring to a lean manufacturing concept that means controlling inventory, raw materials and work-in-process.

Before incorporating lean principles, Lincoln was buying steel in bulk to get the lowest price. At any given time, there was two years' worth of raw steel inventory on hand.

After the lean conversion, steel suppliers with just-in-time delivery capabilities, rather than low prices, became preferred vendors. Instead of buying 150 types of steel, purchases were streamlined to only 12.

The new system provides Lincoln's employees with tighter control of inventory levels and costs with a visual inventory system. Stacks of raw steel are kept in a central location, and each stack represents three to five days' supply. Replenishments are ordered directly from the supplier and delivered the next day -- all without a planner, scheduler, purchasing agent or buyer.

All of these moves came with a risk. Investing in a company during a down economy is almost unheard of, and many of the new philosophies contradict the old Lincoln model. But in some ways, they are right on track.

"I can remember when I was a sales trainee back in the early 1970s," recalls Stropki. "The seasoned veteran salesperson came in and made a presentation to us. His philosophy was you need to work smarter, not harder. The more I thought about it, I thought, 'There's always going to be somebody who's smarter than you ... and there's always somebody who'll work harder. What if you couple the two together? If you can work smarter and harder combined, that's a pretty tough combination for people to beat.'"

These days, the manufacturing industry contains numerous contradictions. On average, manufacturers are smaller than they were 10 years ago. However, according to the Department of Commerce, 91 percent of all private research and development spending in the United States was done by manufacturers.

Those numbers mean that if manufacturers want to stay in business and compete globally, they must spend the resources required to strengthen their businesses. Lincoln's management knows this.

"I don't know how many 107-year old companies are left in the U.S.," Stropki says. "I can tell you they're not in the welding business. But I mean 107 years in Cleveland, heavy industrial-based, basically the same ownership format ... part of a relatively small independent company with public shareholders, it's a very unusual position."

Obviously, nothing is as easy as it sounds. Stropki and his staff acknowledge they have a long way to go.

"The hurdle rate gets continuously higher and farther apart," says Stropki. "You can't focus on a single element. I think you have to set a vision for what you want to accomplish. Then you just have to be committed that you're going to accomplish that vision.

"In any size company, if the vision is correct, it's going to take change within the organization to accomplish that vision."

Lincoln Electric

Tuesday, 30 April 2002 06:06

Fait de compete

It use to be that the only employees required to sign noncompete agreements were high-level executives or research and development employees. Today, noncompetes are used more often throughout companies, even in the sales department.

"Sales folks have direct and pretty much daily interaction the life blood of a company -- the customer," says Jeff Dunlap, a partner at Ulmer & Berne.

Fierce competition and advanced technology allows the quick and easy transfer of vast amounts of data that could lead to the loss of high-value intellectual property.

"In my mind, a company has three major assets -- its confidential information, its employees and its customers," says Dunlap. "Protecting these essential assets for a limited period of time to ensure they don't fall into the wrong hands is what noncompetes are all about."

Employees who take confidential information about customers, clients and buying habits with them can be more dangerous than you think.

"They can do serious damage to their former employer," Dunlap says.

Other restrictive covenants include nonsolicitation agreements, which restrict employees from soliciting former customers, suppliers and co-workers, and nondisclosure agreements, which prohibit them from disclosing confidential information or trade secrets from a previous employer.

Noncompete contracts can get very specific, limiting where and for whom a former employee can work. Some may even specify a limit on the length of time a former employee must abide by the contract before working for a competitor and/or restrict the geographic region for employment.

The average restrictive covenant covers one to two years, and some noncompetes include narrow regional restrictions. However, excessive time limits and unrealistic regional exclusion are dangerous because they may render a contract unenforceable under existing law.

Also, if unreasonable demands scare away potential candidates, the covenant may be too restrictive. Consider your business and know what you want to protect, says Dunlap.

To ensure a restrictive covenant will stand up legally, Dulap suggests taking these steps:

* Apply and enforce contracts consistently throughout the company.

* Require restrictive covenants at the time of employment. How to reach: Ulmer & Berne, (216) 902-8825


Trade secrets

One key to writing an iron-clad noncompete is knowing what to protect.

According to the Alexander Hamilton Institute Employment Law Resource Center in New Jersey, only some information falls under the terms of a restrictive covenant. Consider these questions when deciding what to protect:

* Is the information generally known outside the confines of the business?

* Is it available to employees and others in the business?

* Were steps taken to ensure the trade secret was protected?

* Is the trade secret valuable to the competition?

* How easily could the trade secret be acquired or replicated by others outside the business?

Friday, 26 April 2002 06:13

AOL Insider

Seated casually in the Wyndham Hotel lobby, Mary Foley doesn't look like a high profile corporate executive. Instead, she looks more like a casual afternoon shopper. Of course, Foley can look any way she wants. As an insider who experienced the wild ride of America Online's explosive growth from a humble start-up venture to a giant Internet Service Provider with more than 12,000 employees, she has that luxury. Especially since when she left in 1999, she took millions of dollars in stock options with her.

Fresh out of college with an industrial engineering degree in hand, Foley joined Quantum Computer Services as a customer service representative. The little-known ISP evolved into the World Wide Web giant, AOL. Foley grew with it, rising through the ranks to call center manager, then corporate trainer.

After she left the company, Foley spent two years chronicling her roles and experiences with AOL. She was in Cleveland last month as part of a 16-city tour promoting her book, "Bodacious: An AOL Insider Cracks the Code to Outrageous Success for Women."

SBN Magazine sat down with Foley to learn, among other things, whether AOL was the result of innovation or was innovation a product of AOL.

What attracted you to Quantum Computer Services?
I had a driving factor – pay the bills. But once I was in, there was a certain kind of contagious enthusiasm. I noticed people really jived, so to speak. They were casually dressed and there seemed to be something more there – it was an intuitive, gut feeling.

Steve Case let us in on his vision, which was, let’s bring on line services to the masses, make it easy to use, graphical, affordable and useful. In 1995 the idea got on the map. People started using e-mail and then the World Wide Web. It was exciting and nerve racking at the same time.

Was Quantum's evolution into AOL a progression or a leap?
It was a leap. In 1988, we had one online service, Quantum Link – a joint venture with Commodore Business Machines. We were about to launch two more, one with Apple Computer and one with Tandy from Radio Shack. [At that time] Internet service was linked to the type of computer you had. But the partnership with Apple was very restraining. We wanted to do things much faster. In 1989, Apple got out and we launched a new service called Apple Link Personal Edition. It was our first online service without a partner. This is what became America Online.

Why did you limit yourself to partnerships initially?
Personal computer hardware had to get to the point of having enough horsepower. Processor speeds were very slow at the time. Prior to 1993 when Windows 3.0 came out, computers weren’t easy to use for people who didn’t quite understand MS DOS, root directory and all those commands you had to type in.

It wasn’t until 1993 that the vast majority of home computer users had something to work. We knew Windows 3.0 was going to be coming out and Microsoft asked us if we wanted to write software for the operating system. We wrote software to be compatible and when Windows 3.0 came out, we were ready. That’s when the volume of member users skyrocketed. You see, Steve Case had a vision and we just had to wait for the hardware to catch up.

Did the price still prohibit massive use?
Modems at that time were considered peripherals. People would pay $200 to $300 for a modem in addition to buying the computer. On top of that, there were monthly charges and hourly rates. If you just wanted to try this new concept – going online – it wasn’t cheap. It took time for that barrier price to come down.

What was AOL’s biggest challenge after Windows 3.0 was introduced?
Aside from the hardware issue, we needed content that was engaging. It had to be stuff we could use and it had to make sense. We questioned, why would people look up the weather or sports or buy tickets on line? So our goal was to find out how we were being used and what was driving the market.

We determined the top two things people did and both centered on communication – that very human component of wanting to talk.

The number one thing was chat, what we now use as instant messages or conference rooms. The second thing was to transfer files and e-mail. All that other content was used but those were the two driving factors to why people wanted to use AOL.

When I look at it from a historical perspective, we went from being driven by technology – computer hardware, modems, graphical user interface stuff – to what can I do with the online service? What am I going to use it for every month? And that’s really where the power is.

We had to create a lot of the platform, grease the skids, lay the railroad tracks for the other stuff to happen.

When did AOL jump from being a player to a leader?
In January 1993, when the AOL version came out and we saw the reception, we were thrilled. We were about 300,000 members. In August of 1994, we hit a million. It was definitely a switch in speed. We were already on the fast track in terms of how we operated. Between 1994 and 1995 we had hyper growth – a whole other definition of growth.

What was your role during this growth period?
I started in customer service, getting people connect to on line services. Then I moved to training people to do that kind of job. In 1994 I took the newly created position of call center manager, a time I call my crash-course in leadership.

In 14 months, the call center grew from 70 to 250 reps working seven days a week, 24 hours a day. I wasn’t a high-level executive but I was solidly edging towards the top of middle management.

In June of 1995 I went into human resources and started a corporate training group. We had grown from 120 employees to 1,200. When I left in 1999, we were at 12,000.

When you go from 1,200 to 12,000, it’s a different type of growth, a different magnitude in terms of impact on the company. It was a new industry, new type of speed, and we didn’t have a lot of the things you would think a company our size would have – policies, structure. It was a very skeleton operation in human resources. We didn’t even have an overall compensation plan or a full-blown orientation for new employees.

Were you preparing AOL for the rapid growth or trailing the growth with training programs?
I wanted to influence the culture so I focused on manager training. The tricky thing was trying to influence the infrastructure, processes, procedures and policies without trying to impede the organization’s growth. We used to joke that we were trying to build an airplane while it was flying at 30,000 feet.

One of the first things I did was create a really robust orientation program. People could come in on the first day and be told who we were as a company, how we were organized, what our goals were. New employees didn’t have to go to their managers on the second day and ask those questions. They already knew. And we needed them to jump in and get going as soon as possible.

My next focus was training the managers.

What was more difficult – 120 to 1,200 employees or 1,200 to 12,000 employees?
They were difficult and exciting in different ways. Growing from 120 to 1,200 employees was a hard, slower growth. Money was much more precarious in that way. We were trying to create the market place. We didn’t have as many people in the market place, consumers as well companies that really got what we were talking about. So we had to really believe in our vision.

The 1,200 to 12,000 growth, in my mind, was the most satisfying, the most fulfilling and the most exciting. I was at a point where I could contribute in more significant ways and see what I did influence the company.

Was there any time that the rapid growth hurt AOL?
In late 1996, AOL, along with the Microsoft Network and Prodigy, went to flat-rate pricing rather than an hourly rate. That brought AOL to its knees. We did the marketing and the forecasting. We knew about how many new people would like to come on. We considered existing members that would want to stay on longer because the clock's not ticking, and new people trying AOL because the cost of trying it was a lot less. Then, in early December, six weeks after going flat rate, we had 37 attorneys general suing the company on behalf of people in their state who could not get online. So many people wanted to try it out that the system got over loaded.

What was AOL's action plan at that point?
We stopped all promotional marketing. We did TV spots telling people what we were doing – trying to get new modems added, leasing lines, enhancing our capacity. There was no historical precedence for this type of growth and we really didn't know how big the untapped potential was because there was no online service at this level before us.

Critics of the company said AOL was done. They said the company would never be able to recover from this. We said, "No." We didn't get this far to let this stop us. The fact that we had 37 attorneys general suing us meant that we had gotten to the point that people were thinking of us like a utility, something they had to have.

How did AOL stay afloat when public criticism was weighing it down?
It was a very big rallying time, a focusing time. Everything we did, even in human resources, was directed at supporting the effort, getting us back to where we needed to be. We had about 6,000 employees at that time. A lot of time was spent ordering hardware, installing it, and making sure we had people to do the technical work. We also increased our hiring efforts on the customer support side.

In a growth environment, how did you keep people calm, motivated and moving in the right direction?
The fact is, you can’t control when people call, what they ask or how often they call. It feels like you have no control over the situation. Customer service reps just kept picking up the phone, call after call. People had the attitude that, we can’t control anything so we’re not going to even try.

But you can’t control a department like that. What I did was a bit against the tide at the time. I said no, there are things we can control. And the things we can control, we will. I needed to add some structure so the reps could be the best equipped they could possibly be when the customers called. Then we adjusted and responded as needed.

To start with, I put stakes in the ground. I made sure people got their breaks so they didn’t get burned out. We had team meetings every week, no matter what. People needed to find out the latest news, have time off the phones, share ideas on dealing with customer problems and just refuel.

What HR problems resulted from AOL's initial growth?
Attendance and tardiness was a problem and both are a high priority in a call center. You’ve got to be there on time because everything is measured in 15-minute intervals. We tracked many customer service aspects and if someone walked in 15 minutes late, that mean that three or four customers had to wait in the phone queue for service.

At first there was some push back because people were being held accountable. And customer service reps were not the only ones. Supervisors were also held accountable for making sure people had breaks and attended team meetings.

We did increased supervisors role in coaching too. They listened in on a certain number of calls, brought the reps in and gave them feedback.

Did coaching and training ease AOL's growing pains?
Over time the mood changed. People realized what we had to do and listened. People started carrying their weight. They were much more proactive, sharing solutions with each other.

Fourteen months later, I moved to human resources. It was announced in a meeting and there was a standing ovation. I had to choke down a few tears. What it said to me was, we liked you as a leader, in some ways you gave us our respect back and we made huge accomplishments because of that. When I left the department, it was more organized, more structured. My focus was, we have a responsibility to this company.

I was 29 at the time and most of the staff were men. Half of them were older than me. To get that recognition just overwhelmed me.

What are some of the lessons you share in your book?
I targeted the book to women but have been told most of it pertains to men too. One thing I talk about in it is the good girl coding we get. We’ve all been raised with the focus on pleasing others like be nice to everyone all the time.

Taking over as call center manager, being a good girl wasn’t going to be effective. Your goal can’t be to be liked by everyone. You’ve got to take the risk that some people are going to think you’re a real jerk. But you have to stay on course anyway.

Anytime you put a stake in the ground, you’re going to get a reaction from people. Particularly if you’re holding them accountable for some kind of behavior. You’ve got to be comfortable with making other people uncomfortable.

There’s a big aspect to being bodacious – you’ve got to look within, look at the good girl and challenge some of those assumptions. I like to be personable but I don’t’ take things personally. I’m willing to say this is what I want, this is how I want it and if you don’t’ agree with that, that’s OK. What we can’t do is violate the sense of who we are just so everything stays smooth.

Were you surprised at the dot-coms crash in 2000 or did you see it coming?
It seemed to me, people were just throwing money at ideas. It was so contrary to my experience at AOL. We had a good idea, but we had a business plan and we flushed it out. With AOL, it wasn’t like we had an idea, added some money and puff, you got something. It was a lot of tenacity, a lot of thoughtfulness, continually watching the environment, the market, the competitors.

At AOL, we weren’t in the green until 92. Quantum started in 88. That was seven years to green. Even after it went to the stock market, there wasn’t a guarantee.

What did AOL do differently than the faltering dot-coms?
It was a combination of running less like an Internet company and more like a business. It was definitely entrepreneurial in that the whole concept was new. Even the way we operated as a business wasn't typical.

We didn't look like an IBM, not only from the way we dressed but the way we operated. We didn't assume things had to be done in a certain way. But we dreamed big.

We got funding. And we had to go back and get more funding. We had to prove what we had done so far and show why people should invest in us. The venture capitalists back then were much more thorough, more realistic. When you look at the whole dot-com craze you realize it was a craze. We knew we had to show what we were worth along the way.

What do you see as the next technology wave to crash into industry?
I think it’s somewhere in the biotech and pharmaceutical industries. The whole human genome project, making drugs that are specific to you, customized to you, that’s where I see a lot of focus and research. I see some of the same vision in this area that I experienced at AOL. People are saying, what can this do for human kind rather than let’s get rich quick.

What drives Steve Case?
He’s very laid back, kind of a quiet guy, friendly to talk to. But when you talk to him, you get the impression there’s a lot going on inside his head.

It’s not natural for Steve to be in the public spotlight. He did a khaki commercial once, a print ad. That’s kind of what he’s like, khakis and rolled up shirtsleeves. He does like to talk about the industry, but when he talks, it’s not as Mr. Salesmen.

Steve is very well read and very much a thinker. He was a huge e-mail fan. He’s also really good at synergies, how things come together. When he started in the business, he started from the marketing point of view.

When you left AOL in 1999, what was its biggest weakness?
When you get to a physical size of thousands of people, you can lose the entrepreneurial aspect that made you so great in the first place. I don't think there's any expectation within the company that it's going to be the same environment as it was in the '80s and early '90s. But what you don't want to lose is some of the risk taking, the new idea generation, innovation and the focus on what the customer experience is.

When you get to the size that AOL is now, things like politics can start becoming really huge. Even to the extent that you can squash some of the things that made you a success. People are not willing to be innovative because the risk is too high. I think this is the company's biggest weakness and the thing they've got to struggle against. Its weakness, in some ways, is also its strength – it makes it hard to have a culture of innovation at every level.

?Did innovation drive the culture or did the culture drive innovation?
Growing the business, growing the market, getting more customers and keeping them on line longer drove people and decisions. If people stayed on longer, they saw more advertisements or maybe shopped more on line. It was really about how do we grow this thing.

By having that mentality, everyone really benefited. We really kept the main thing, the main thing. I think I enjoyed it because there really wasn’t a lot of muck.

Like any other start up, when you don’t have a lot of money you use stock options. AOL did stock options based on performance and everybody was literally an owner in the company. Everybody wanted it to work and did their part to make it work.

When I left, there were more layers, a greater distance from what you do to the bottom line. That made it harder.

Why title your book Bodacious?
Bodacious means bold, gutsy, remarkable, outstanding, audacious, not afraid to put stakes in the ground and say, this is how it’s going to be. For me, it became this positive spirit of not being afraid to make choices to achieve success, whether in my personal life or my career.

When I started realizing the good girl was holding me back, I knew if I wanted to have success in my career I was going to have to get comfortable with taking chances. And I did.

AOL

Tuesday, 26 February 2002 12:15

Custom fit

Lincoln Electric Co., headquartered in Cuyahoga County, has been a solid presence in the manufacturing community for 100 years, withstanding depression, recession and international competition.

Beyond withstanding, it has grown substantially. Today, Lincoln generates nearly $1 billion in annual revenue and has 7,000 employees in 160 countries.

Such an established company could find it easy to be complacent, but the producer of arc welding and cutting products has tried to keep its edge. George Slogik, Lincoln's systems development manager, admits that a year-and-a-half ago, the company was a bit behind the curve in terms of its technology integration. But today, Slogik says, "We're right where we need to be."

Lincoln's customer service requirements are vast and include technical recommendations, product tracking and invoice resolution. The company's extensive product offering required a lot of guidance by a highly skilled sales engineer staff already dealing with time constraints.

As with any worldwide organization, there are many customer service issues, including dealing with customers in numerous time zones, maintaining sufficient staffing and providing order information. Lincoln needed to find a solution to keep up with its global customers.

In response, Slogik and e-business manager Jim Appledorn developed Lincoln's e-business strategy in 2000 as four separate but integrated programs. The project began with an extensive customer analysis that revealed Lincoln's customers wanted up-to-the-minute order information available online.

Slogik and Appledorn responded with a customized extranet called myLincolnElectric.com for customers to access information. MyLincolnElectric.com provides order and shipment status, inventory availability, payment history and pricing programs. By integrating it with Lincoln's back-end SAP system, all information is available in real-time.

Simultaneously, the company's Internet site was redesigned with state-of-the-art Web navigation technology. The redesign included an electronic product catalog for both current and potential customers. Soon, Lincoln will be ready to move on to the next phase and expansion. A business-to-business tool will supply product registration, warranty applications, tracking and order processing.

Appledorn says the main goal was to make it easy to do business with Lincoln, and great care was taken during development to keep it simple.

"If the tools required a lot of training, then we kind of missed the target," he says.

In the three months since its completion, the site has gotten more than 10,000 hits.

"Those are inquiries customers would have had to make in traditional ways," says Appledorn. "Potentially, that's 10,000 phone calls that didn't have to take place."

Appledorn doesn't think of the site as decreasing customer contact; rather, it enhances service by offering real-time data. The service comes in the form of up-to-date information available when the customer needs it.

The change has freed up 10 percent of Lincoln's engineers time to use elsewhere. Appledorn and Slogik expect to see an increase in sales of as much as 5 percent.

"It makes our sales department much more effective in doing the big job they're being asked to do, and that's to go out and generate new sales," says Appledorn. How to reach: Lincoln Electric Company, (216) 481-8100 or www.lincolnelectric.com

Tuesday, 22 January 2002 05:30

Sufficient sleep yields big paybacks

Tim Cleary didn't like the man he had become. The once jovial Irishman was irritable, hard to work with and short-tempered. Managing 24 employees at a Cleveland-based grocery had gone from difficult to impossible. But Cleary wasn't experiencing a personality change -- he was living the effects of sleep deprivation.

Benita Chernyk, Ph.D. says lack of sleep can lead to severe health problems, both physical and mental. In 1994, Chernyk, along with Diane Eden, M.D. and Shari Ridge, Ph.D., founded Access Behavioral Care. Today, ABC is one of the largest privately owned behavioral health groups in Northeast Ohio with locations in Shaker Heights, North Olmsted and Mentor.

"Sleep is probably one of the most important biological factors in taking care of your body," explains Chernyk. "Lack of it can also make you vulnerable to some very significant psychiatric problems."

Sufficient sleep is one of the first luxuries to be eliminated during stressful times at home or work. But depriving your body of rest can cause some of the same reactions seen with certain types of drug use.

For two years, Cleary awoke with a headache. His normal rosy complexion was ashen and his mood swings frequent. His irritability didn't end with his family – it overflowed into his work and his management style. Cleary says the least little problem on the floor with customers could result in a tirade in the backroom with employees.

"I never realized it though," says Cleary. "You're making decisions on very little sleep so you're tough to work with. I just couldn't keep it together all the time."

As work pressures mount and time becomes a scarce commodity, deviating from your normal sleep/wake cycle by even an hour or two carries many consequences including:

* Loss of appetite
* Hyperactive behavior
* A false sense of personal power
* Paranoia
* Difficulty in relaxing
* Subsequent insomnia
* Hyper-vigilance

Chernyk suggests keeping sleep patterns as routine as possible. When stress makes it difficult to relax, the following suggestions may help:

* Minimize your alcohol intake. While initially a sleep inducer, alcohol causes residual insomnia.

* Limit caffeine to three to four cups, preferably before lunch.

* Nicotine is also a stimulant – don't smoke two to three hours before bedtime.

* Keep your routine consistent; avoid naps and go to bed the same time, even on weekends.

* Get up at the same time every morning; the more routine you can be, the better.

* Keep your sleep environment comfy and cozy.

* Have good sleep hygiene practices, i.e. don't read, watch television or do paperwork in bed.

When every attempt fails, don't hesitate to seek professional help. In Cleary's case, it was sleep apnea rather than outside influences at the root of his sleep disorder. Throat surgery and correcting a deviated septum eliminated the apnea that caused Cleary to stop breathing 85 times per hour and ultimately never diving into a deep, restful sleep.

"My energy level increased…the headaches are gone," says Cleary.

And although he has a better appetite, Cleary says he lost weight and feels more like himself. Getting the proper sleep not only increased his energy level, it gave him a new outlook on life.

"Lost sleep is almost contagious," says Chernyk, so if you've been depriving yourself of that much needed rest, plan on some difficulty in getting back into a healthy routine. But like any good habit, the reward is plentiful and you are the prime beneficiary.

Wednesday, 02 January 2002 05:28

Lean and mean

Unless you're a cash-heavy manufacturer with a sugar-daddy parent company, the latest and greatest technology has to pay for itself or it'll never get past the CFO. But ebusiness can hold its own in the real world, and high tech doesn't mean eliminating human intervention. Just try sending your materials planner on vacation and see how well the system runs itself.

Today's return on investment equates to integrating systems that demonstrate value to your customers and in return, gives you a competitive edge. It also means incorporating lean manufacturing processes – a cultural revolution that analyzes processes and removes non-value added steps from your system.

"The philosophy isn't new," says Mike Smerdel, manager of eBusiness Solutions at CAMP. "But it's gaining a greater degree of momentum in the manufacturing sector."

Lean processes are just one of the tools that allows companies to raise the bar, set the expectations and see the value created by removing sludge from systems.

Smerdel says today's leaders are looking for ways to better service customers and drive down the cost of doing business.

"If you do that well through your electronic interface issue, that's where you're really going to gain some traction," he says.

The biggest bang-for-the-buck comes from giving customers what they couldn't get through traditional systems, not just a Web site. People may browse your Web site once, but if it doesn't give back something for their investment in time, it's a one shot deal.

So consider the possibilities on, for example, custom orders and specialized products. What is your turn around time on quotes? Could that process be systematized? Would your West Coast customers appreciate real time quotes after 5 p.m. EST? Or think about a rush international shipment sitting in Customs on, say, Thanksgiving Day.

Would it be beneficial to have export documents on an extranet site that customers can access?

Information exchanges also add value. A heavily engineered product can be put on an extranet, allowing multiple people around the world to work on the same set of diagrams. Companies can save modifications through a conversation thread until the design is complete. Dollars are driven out of the process with fewer face-to-face meetings, a paper trail follows the development, conception to reality is quicker and the customer is in the loop along the way.

"Speed to market is always going to be an issue," says Smerdel. "To trade information…to make the product better and faster, that's clearly an advantage."

Tru-Cut, a contract manufacturer in Sebring, drove costs out of its process by analyzing its value stream with a CAMP consultant. Its batch and queue system resulted in excessive work-in-progress and 30-day advance raw material purchases. Last year, more than $250,000 was saved by moving raw material purchases to a seven-day cycle, decreasing lead time and freeing up cash and floor space. The resulting impact was more than $250 million in savings.

Smerdel says CAMP is seeing tangible results with its own redesigned Web site with click-through links that put customers into informational sites or registration forms for upcoming events.

Aside from programs and seminars, CAMP's 125 engineers and consultants have assisted more than 1,400 regional companies in implementing manufacturing improvement projects.

Having cutting edge technology carries clout but getting a return on your investment that keeps your doors open for business, that carries respect.

How to reach:CAMP, www.camp.org